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Released July 23, 2020 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Steel Dynamics Incorporated (NASDAQ:STLD) (Fort Wayne, Indiana) is pressing forward with its capital project slate this year despite lower earnings caused by the economic slowdown, company officials said Tuesday.
Industrial Info is tracking $2.25 billion in project activity by the steel producer.
Industrial Info is tracking $2.25 billion in project activity by the steel producer.
Click on the image at right for a graph showing Steel Dynamics' project activity by state.
The steel producer reported net income of $75 million for second-quarter 2020, compared with $194 million for the same quarter a year earlier, as steel and ferrous scrap demand declined. Sales for the just-ended quarter were nearly $2.1 billion, compared with $2.7 billion in second-quarter 2019.
The company cited lower prices and shipments resulting from the temporary closures of numerous steel-consuming businesses. Domestic automotive producers and supply chains idled operations beginning in March 2020 and slowly began restarting production in May and June, Steel Dynamics reported, adding that non-residential construction-related steel demand was steadier during the quarter.
As states issued shelter-in-place mandates and domestic manufacturing slowed, scrap supply and collection declined, said Chief Financial Officer Theresa Wagler during the company's earnings conference call.
"This in combination with lower domestic steel production caused weak ferrous scrap demand. As a result, our metals recycling operations recorded an operating loss of $6 million," she continued.
Chief Executive Officer Mark Millett said the temporary closure of automotive production and related supply-chain closures "meaningfully reduced flat-rolled steel demand. The severe decline in energy prices related to oversupply significantly reduced steel demand from steel pipe and tube manufacturers. However, construction-related steel demand was more resilient."
As a result of lower pricing and demand for flat-rolled steel, "we believe about 15 million tons or so of flat-rolled sheet capacity has been idled [across the industry], representing over 20% of annual domestic production capacity," Millett said.
Despite the lower earnings, Wagler and Millett appeared to be upbeat, saying general economic conditions were improving after the trough of the second quarter.
During the just-ended quarter, Steel Dynamics' steel mills operated at almost 80% capacity, while the rest of the domestic industry operated at 55%, Wagler said. Also during the last quarter, the company invested $527 million in fixed assets, including $371 million for its flat-roll steel mill project in Sinton, Texas.
For the second half of 2020, the company is planning for capital investments to be between $800 million and $850 million, of which the Sinton steel mill represents $700 million to $750 million, Wagler said.
"We estimate capital investments for the full year of 2021 to also be in the range of $700 million to $750 million, with the Texas Mill representing about $580 million of that amount, as their operations are expected to begin mid-year 2021," Wagler added.
The $1.9 billion electric-arc furnace (EAF) steel mill will be capable of producing three million tons per year. It will feature a 550,000-ton-per-year galvanizing line and a 250,000-ton-per-year paint line. For more information, see Industrial Info's project report.
Millet also noted that its Columbus, Mississippi, flat roll facility's new 400,000-ton-per-year galvanizing line produced its first prime coil on July 9. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
The steel producer reported net income of $75 million for second-quarter 2020, compared with $194 million for the same quarter a year earlier, as steel and ferrous scrap demand declined. Sales for the just-ended quarter were nearly $2.1 billion, compared with $2.7 billion in second-quarter 2019.
The company cited lower prices and shipments resulting from the temporary closures of numerous steel-consuming businesses. Domestic automotive producers and supply chains idled operations beginning in March 2020 and slowly began restarting production in May and June, Steel Dynamics reported, adding that non-residential construction-related steel demand was steadier during the quarter.
As states issued shelter-in-place mandates and domestic manufacturing slowed, scrap supply and collection declined, said Chief Financial Officer Theresa Wagler during the company's earnings conference call.
"This in combination with lower domestic steel production caused weak ferrous scrap demand. As a result, our metals recycling operations recorded an operating loss of $6 million," she continued.
Chief Executive Officer Mark Millett said the temporary closure of automotive production and related supply-chain closures "meaningfully reduced flat-rolled steel demand. The severe decline in energy prices related to oversupply significantly reduced steel demand from steel pipe and tube manufacturers. However, construction-related steel demand was more resilient."
As a result of lower pricing and demand for flat-rolled steel, "we believe about 15 million tons or so of flat-rolled sheet capacity has been idled [across the industry], representing over 20% of annual domestic production capacity," Millett said.
Despite the lower earnings, Wagler and Millett appeared to be upbeat, saying general economic conditions were improving after the trough of the second quarter.
During the just-ended quarter, Steel Dynamics' steel mills operated at almost 80% capacity, while the rest of the domestic industry operated at 55%, Wagler said. Also during the last quarter, the company invested $527 million in fixed assets, including $371 million for its flat-roll steel mill project in Sinton, Texas.
For the second half of 2020, the company is planning for capital investments to be between $800 million and $850 million, of which the Sinton steel mill represents $700 million to $750 million, Wagler said.
"We estimate capital investments for the full year of 2021 to also be in the range of $700 million to $750 million, with the Texas Mill representing about $580 million of that amount, as their operations are expected to begin mid-year 2021," Wagler added.
The $1.9 billion electric-arc furnace (EAF) steel mill will be capable of producing three million tons per year. It will feature a 550,000-ton-per-year galvanizing line and a 250,000-ton-per-year paint line. For more information, see Industrial Info's project report.
Millet also noted that its Columbus, Mississippi, flat roll facility's new 400,000-ton-per-year galvanizing line produced its first prime coil on July 9. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
